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Banks lending VND at US$ interest rates
Analysts have anticipated a low-lending interest rate war among banks which will benefit both businesses and banks. While banks can provide more services with the preferential interest rates, businesses can cut production costs.
Most businesses complain that they cannot access VND loans as the interest rates of 20-21% per annum prove to be unaffordable for them.
Meanwhile, they cannot borrow money in US$, which carries the interest rates of 8-10% per annum only, since the new regulation stipulates that US$ loans can only be given to companies that need dollars to import commodities. Bankers have been racking their brains to find the best solution for businesses.
Eximbank has launched a programme on lending VND at the interest rates for US$ loans, under which companies that make products for export can borrow money from Eximbank at 8.4% per annum, just 60% of the currently applied interest rate for VND loans.
When businesses show export contracts or L/Cs, the bank will disburse VND capital at interest rates for US$ loans so that businesses can purchase materials for making products for export. When businesses get money from the export contracts, they will sell the foreign currencies to the bank at the exchange rates the two sides agreed upon when the banks disbursed the VND capital.
Eximbank initially reserved VND2tril for the programme, of which VND1tril has been disbursed in 3-4-month term loans over the last month. With the programme, businesses can save VND1bil/month on interest payments for every VND100bil worth of loans (they have to pay VND700mil a month instead of VND1.75bil).
According to Truong Van Phuoc, General Director of Eximbank, as businesses are happy with the programme, and always pay debts when due, the bank has decided to raise the credit limit for the programme to VND5tril. Eximbank’s staffs are going to the Cuu Long River Delta in an effort to expand the loaning to farm produce export companies in the area.
The director of a food export company, who asked to remain anonymous, recalled the stories of unsold tra fish and paddies, and said that the products have been left unsold not because of businesses’ lack of capital, but because of the overly high interest rates. The overly high interest rates do not encourage businesses to purchase fish and paddies for storage. It is estimated that businesses have to pay 1.7% a month in interest on the loans they take out to collect materials from farmers. That explains why the State Bank of Vietnam ordered banks to arrange capital for loaning, and commercial banks offered to lend, but businesses have still been keeping away.
Recently, ACB has decided to inject $20mil in a programme to support exports, under which businesses can borrow VND at special interest rates. ACB said that the interest rates of the VND loans are equal to the rates for US$ loans and 70% of the rates for VND loans. The bank has announced it will focus on lending for four main export groups: seafood, woodwork, rice and rubber.
Sources say that other banks are also considering launching new credit products in order to lure more clients. Analysts have anticipated a low-lending interest rate war among banks which will benefit both businesses and banks. While banks can provide more services with the preferential interest rates, businesses can cut production costs.
VNN
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